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tv   Nightly Business Report  PBS  March 23, 2011 1:00am-1:30am PDT

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>> tom: after three powerful days to the upside, wall street's bulls take a pause. still, the dow sits above the 12,000 level, stumping strategists. >> i've never seen the market confronted with so many unknowns and so many issues that, clearly, any one of which could undermine the market and send it dramatically lower. yet, the market sort of hangs in. >> susie: we take a closer look at the stock market's resiliency. you're watching "nightly business report" for tuesday, march 22. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> susie: good evening, everyone. the stock market's three-day winning streak came to an end today. tom, investors took a break to process all of the continuing problems in japan and the middle east. >> tom: susie, all three of the major averages ended modestly down, and trading volume was the lowest of the year. >> susie: so, what's next for the u.s. stock market? suzanne pratt got some answers. >> reporter: on wall street,
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they're calling it the "teflon market". throw at stocks an earthquake, tsunami, and nuclear crisis in japan, not to mention a war in libya, yet the dow is above 12,000. nyse broker ted weisberg is surprised by the market's resiliency. but says he finds the recent volatility very troubling. >> the volatility, to me, simply says that there's no confidence. yes, the market's had a dramatic move off the lows, but for the most part, this move has not be accompanied by a lot of volume on the upside of the swing. >> reporter: still, the question is whether stocks can maintain their non-stick status? experts say that will depend on the quality of corporate profits. we'll get that news starting in about three weeks. according to thomson reuters, which tracks earnings data, wall street will not be disappointed by first quarter results. s&p 500 firms are expected to show profit growth of 13.6% for q-1. that number has steadily
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improved from october of last year. strategist nick colas expects earnings season will be a good stretch for the stock market, as long as profits are boosted by more than just cost-cutting. >> investors now are looking for revenue growth. they want to see actual top line expansion, better business, better tone of business. so, i'll be watching to see what analysts do with their revenue expectations as we go into april and may and june. >> reporter: but with oil prices rising and concerns escalating about the global economy, it's valid for investors to wonder if stocks are a safe bet. strategist stephen freedman says "absolutely," as long as investors keep their eyes open. >> it's important to keep one's eye on the macroeconomic recovery and expansion. and there, we believe, the signals show if you take a 12- month horizon, you're likely to be better compensated in equities than in bonds. >> reporter: better compensated, maybe, but even a teflon market can still give investors a good
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dose of queasiness. suzanne pratt, "nightly business report," new york. >> tom: here are the stories in tonight's "n.b.r. newswheel." as we mentioned, buyers paused today. the dow fell almost 18 points, the nasdaq lost eight, and the s&p 500 was down four. trading volume was lighter-- 822 million shares moved on the big board, 1.7 billion on the nasdaq. as fighting in libya heated up, oil prices hit $104 a barrel. april crude futures rose $1.67, almost 2% higher, in new york trading. sky high oil prices and falling demand have delta airlines cutting flights. delta says it will cut capacity by 2% from 2010 levels as it copes with higher fuel prices, and as much as $400 million in lost sales in japan. and the federal reserve has cut its biggest annual check ever to uncle sam-- $79.3 billion.
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the payment to treasury for 2010 is up 67% over the prior year as the fed earned hefty profits on its chief bailout investment, mortgage backed securities. still ahead, it has been a year since historic health care reforms became law. we ask the c.e.o. of a major hospital group about how the reforms have changed business. >> susie: modest gains today in japan's fight to contain its nuclear crisis. power was reconnected to all six reactors at the fukushima daiichi nuclear power plant, but power has yet to be turned on there. also today, sea water near that plant showed high levels of radiation, raising new worries about contamination in seafood. lucy craft reports from tokyo. >> reporter: japan's food ban only applies to spinach and milk. but as expected, the radiation scare has prompted a number of retailers to shun all produce from the four states closest to the troubled nuclear plant. japanese officials say fear
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about health risks is overblown. the government is rushing to issue new guidelines for safe radiation levels in food. compensation to farmers who are being forced to dump their milk and spinach will expand the burgeoning cost of relief and recovery from the quake, tsunami, and nuclear plant disaster. the government is preparing a budget of about $120 billion to deal with the most urgent issues-- clearing debris and providing prefab dwellings for the nearly half-million homeless. supplementary budgets are expected later. meanwhile, the crisis has triggered a parts shortage that continues to sideline japanese auto makers. an estimate by goldman sachs says that idle plants are costing toyota alone $37 million a day. lucy craft, "nightly business report," tokyo. >> tom: still no word tonight on when japanese factories providing critical supplies of silicon wafers will be back up and running. those wafers are a key link in the global high-tech supply chain. as darren gersh reports, the earthquake in japan has shown
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the world just how vulnerable some links in that supply chain can be. >> reporter: whether it's a tablet, a mobile phone, or a digital camera, if it has a memory, your gadget's supply chain probably winds through japan's earthquake zone. plants producing as much as 25% of the world's silicon wafers, especially wafers used to make memory chips, were damaged in the quake. to get by, many chip makers are now relying on their inventory of wafers. that should buy the industry some time, says i.h.s. isuppli's dale ford. >> if it's going to take them more than, say, three weeks to restore that production and that supply, we could start to feel the pinch in the ability to meet the demand in the supply chain. >> reporter: concern over short supplies has already driven the prices of some memory chips up 10%. and shin-etsu and other japanese producers of silicon wafers have provided little information about their status and
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conditions on the ground. >> usually, you have to build these facilities where you have a stable, strong supply of power, and that will be a complicating factor for them that as long as these rolling blackouts are going through japan, that's going to hinder their ability to resume production. >> reporter: while global supply chains can be amazingly efficient, the earthquake has drawn new attention to their vulnerabilities, says depaul business professor nezih altay. >> i don't think we have seen every single effect, every single impact out of this disaster yet. i still expect a lot of news to come out of japan that will impact the global supply network. >> reporter: the ability to shift production around the world is one way chip makers have become more resilient, says
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brian toohey, president of the semiconductor industry association. one example is texas instruments, which is making up for lost production in japan by shifting production to plants in other countries. >> still, it's a major issue and major disruption and people are still assessing it, but given the complex global supply chains that now exist, companies are able to look to other sources of supply and production. >> reporter: whatever the disruption, chip makers are well-positioned to withstand the impact. the industry has been riding a strong recovery with sales up more than 30% last year. darren gersh, "nightly business report," washington.
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>> tom: tomorrow marks a full year since president obama signed the affordable care act into law. while the most controversial requirements of health care reform don't go into effect for three more years, the head of a $3 billion a year hospital chain wants to see more attention paid to quality. we spoke with brian keeley, c.e.o. of baptist health south florida at its new $210 million hospital in west miami due to open next month. we started with how health reform has changed his hospitals. >> probably the most important thing is the whole focus on quality and patient safety, and the whole value purchasing initiative, and that is to pay for quality and good outcomes, as opposed to paying for care on a fee for service basis. from a baptist standpoint,
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we enforced and accelerated our focal point on patient service and patient safety. >> tom: how has that changed in the specific year. what specific steps has baptist done to answer the call in the health care reform legislation. >> we've done two things. one thing we've done is spent a huge amount of money on information technology. you've got to tie all of the hospitals together. have you to tie together all of the outpatient centers and data bases, and evidence medicine and protocols, and best practice, and what have you. we spent a huge amount of money, north of $100 million, the total amount range, on information technology. and the second thing, we call it clinical integration. how do we align the physicians to be be focusing on not fee for service, but to focus on quality and safety and patient satisfaction and
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wellness. >> tom: businesses of all sizes will say health insurance premiers are going up, and health care companies will say insurance is going up. that gets down to the health care delivery system of which baptist is a big part of here in south florida. how have your costs changed with the reform legislation? >> our costs have not been affected by health care reform, other than our own initiative. and we initiated something last year to reduce the cost per adjusted admission. we did that in anticipation of where we believe the system is going in the long-term. we slightly reduced our cost, which is unprecedented in our industry. >> tom: what steps did you take to be able to reduce that cost per patient? >> we replaced our agency nursing staff and the travelling nurses, which have a very significant premier. with our own nurses. not only did we save a lot of money, but the quality
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of care rises because these are the people really devoted to the care of our patients. and that number is in excess of multi-millions of dollars. that was a very, very substantial amount of money. a little counterintuitive. we hired people to save money, and the reason was because of the recession. we have a goodly supply of nurses which we didn't have a couple of years ago. >> tom: one of the longer range goals of health care is to increase the pool, with the theory that the total cost of insurance could come down, and hospitals would have more paying clients. how have payments -- the payment mix changed with regard to reform legislation? >> i don't think we've seen a significant change and the mix, with the exception of a few number of people -- a large number of people who don't have insurance. >> tom: brian, what do you say to business owners who are looking at the health care legislation, and deciding there is so much uncertainty about the future of providing health care for his or her employees, the costs of premiums continue to go
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up, despite the legislation here in the short-term, and the cost of services are continuing to become more expensive, generally speaking, and so, thus, they're not going to provide insurance. from a delivery standpoint, from a member of the community, how do you answer that business person? >> i can't defend health care costs. i think health care costs, the increase in health care costs right now are unstaicial. unsustainable. i believe everybody in the industry realizes we need to wrap our arms around this. unfortunately, the new health care law does not have a lot of teeth in terms of reducing health care costs. that's something we need to put a lot of focus on. >> tom: are patients better off a year after health care reform legislation than a year ago? >> i think it is going to take a few more years to have that manifest out. because we're just in the very embryonic stage of that. >> tom: brian, appreciate that. >> my pleasure. >> freafting information on the health care, tom,
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and moving from that back to wall street. investors here seem to be thinking more about earnings these days than a lot of the other world issues. >> tom: always looking forward to earnings season. we're slowly seeing a small trickle come in. a couple of the big losers were earnings related. so let's get everybody updated with tonight's "market focus." after a three-session rally, the major stock indices were fractionally lower. still, there were some areas of volatility. just look at the drop in walgreen today, slipping more than 6%. volume was five times normal. walgreen was the biggest loser of the s&p 500. this is the past 90 sessions, showing we're at the lowest price of the year. earnings came in as expected. it even increased its prescription market share. still, goldman sachs calls the
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quarter a "setback." also turning in results was cruise ship operator carnival-- again, no surprise. but its current year outlook was less than anticipated. and that disappointment hurt. shares dropped 4.5%, the second worst in the s&p 500. this is the past 180 sessions. as oil prices have rallied, shares have fallen almost 20%. competitor royal caribbean slipped in tandem with carnival, off almost 4% as volume doubled. helping limit some of the market losses-- medical device maker st. jude. shares jumped 6% to a new 52- week high. j.p. morgan calls a new heart defibrillator cable the most important new device in almost ten years. the analyst thinks st. jude will gain market share from competitors. those competitors include boston scientific, which fell 4%.
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and medtronic was off 1%. after getting slammed yesterday, telecom led the sector gainers thanks to cellular tower company american tower. this is the past 90 sessions. the stock bounced 4.5% after falling yesterday over worries about less business should the at&t buyout of t-mobile become a reality. consumer stocks were the weakest, led lower by retailer urban outfitters. shares fell 4%. they have been falling since disappointing earnings earlier this month. this is a 180-session chart. the stock is at four-month lows. watch jabil circuit tomorrow. shares were down 3% at the close, but popped up 10% after the bell. its earnings and outlook were better than expected. finally, the micro-cap firm prana biotech.
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this is the past month, and look at the action this stock has seen in the past two days-- more than doubling. up 36% just today. it received positive results on an alzheimer's drug. but the stock has seen the action before. in april, shares doubled in a day thanks to news on the same drug. two months later, the stock dropped back down. and that's tonight's "market focus."
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>> tom: going big is in fashion for gold investors. small mining stocks did well last year as gold prices shot up. but bigger, more established names are doing better this year. tonight's "word on the street"-- "gold." alix steel is a reporter at alix, always nice to see you. what qualifies as a big gold miner. >> you have to think big. we're talking gold producers that produce about one million plus ounces of gold a year. the biggest company in the whole world produces more than 7 million ounces of gold. >> tom: and they have production. they're not speculative, still looking for the stuff. they've found it in the ground. what drove the small mining gains we saw last year and what has changed? >> you said it, speculation.
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as we saw the gold rise 26%, we saw a lot of mergers or takeovers from the big guys to small guys looking for gold. investors kept looking for the next big thing, the next big takeout target. there was a lot of euphoria in the market. that's different this year. >> tom: let's get to the biggest of them old. barrick gold, a.b.x., the ticket symbol. the share price is up 27%. not a bad return. the analyst analysts you speak t think more up side is ahead. why? >> the theme for goal miners in 2011 is you have to deliver. barrick can deliver. in five years, they want to produce 9 million ounces of gold. it's only 12% growth, but that is 9 million ounces of gold. they have two new mines coming on stream. they have $4 billion in cash. they're hedged in oil, $85
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a barrel. in terms of the two stocks we're going to talk about, this one is a little cheaper, but not as much growth. so you've got to weigh the options there. >> tom: looking for valuation plays. goldcorp, g.g., the ticker symbol on this bun. the past 12 months, up about 35%. $38 billion market cap. the stock price chart looks similar to barrick gold. what could make it change? >> absolutely. again, it is producing the gold. goldcorp want to produce about 2.6 to 2.7 million ounces of gold. in five years, they're going to want to grow 60%, to 4 million ounces of gold a year. the reason they're going to be able to do that is one of the biggest silver mines, penasquitos, and they can sell the silver and use it to offset the cash cost of producing an ounce of cold. you're going to have to pay up for this growth, but it does have a high
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growth. >> tom: any disclosures for these, alix? >> no. none. no stocks. >> tom: you can read more of her article at word on the street with alix steel, reporter with the street >> susie: here's what we're watching foromorrow. federal reserve chairman ben bernanke speaks to independent community bankers in san diego. we'll also see new home sales for february and weekly mortgage applications. hilary kramer is our "street critique" guest. send your questions to research in motion plans to go toe to toe with the ipad next month. on april 19, the blackberry maker will release its tablet computer called the playbook. it will be sold through several retailers, including at&t, sprint and verizon. the tablet is now available for pre-order at best buy. the playbook is smaller than
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apple's ipad, but it will cost about the same. >> tom: speaking of the ipad, it goes global this friday, rolling out in an additional 25 countries, including france and the u.k. demand has been high, with wait times of four to five weeks for online orders. meanwhile, a federal judge has ordered apple c.e.o. steve jobs to face the music in an anti- trust lawsuit involving ipods. a group of consumers accuse apple of creating a music- downloading monopoly with its itunes music store and ipod players. the judge says jobs, who is on medical leave, can be questioned for a total of two hours.
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>> susie: when it comes to getting ahead in business, tonight's commentator believes, now more than ever, there's nothing more valuable than finding a mentor. here's alfred edmond, jr., senior vice president and editor-at-large at "black enterprise." >> what you've heard is true-- the best teacher is not experience, it's other people's experience. that's why it's important for new entrepreneurs to effectively network with more established business owners. here's how: first, be genuinely curious about their business. look for ways to be supportive and helpful. if you are in the market for their services, consider becoming a customer. no one commands attention like a paying client. also, if there's a local chamber of commerce or other business group, become an active member.
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attend events such as the black enterprise entrepreneurs conference, where you can identify and connect with business mentors. use social media, especially twitter and linkedin, to connect with entrepreneurs you respect and admire. don't just promote yourself; go out of your way to share useful information, and to be supportive of their social media messages and agenda. the entrepreneurs you do this for will likely reciprocate, and be more receptive to networking with you offline. i'm alfred edmond, jr. >> tom: that's "nightly business report" for tuesday, march 22. i'm tom hudson. good night, everyone, and good night to you, too, susie. >> susie: good night, tom. i'm susie gharib. good night, everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:
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this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh >> more information about investing is available in: to order this dvd, call 1-800- play-pbs or visit online at >> be more. pbs.
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